Coupang has learned a lot from Amazon’s path, and it won’t just stay in South Korea, it will successfully transition to Japan, Taiwan and likely Singapore and eventually Indonesia. Amid regulatory tensions in China with E-commerce firms, Alibaba, JD.com and others will be impacted.
Meanwhile Coupang’s valuation and stock price from its IPO continues to plummet almost as if it were a SPAC or a speculative play, but it’s not.
Coupang is one of the most solid E-commerce companies in the world, with many consecutive 50% growth quarters. Coupang’s grocery offering, Rocket Fresh, and Coupang Eats, its food delivery offering, accounted for $120 million of the $122 million adjusted EBITDA loss. Coupang trades at a discount since Americans don’t understand how advanced South Korea is or the market opportunity with Japan and Taiwan.
Coupang went IPO at $48. It’s now $29, when the market is at all time highs. It makes little sense. This is one of the fastest growing E-commerce firms in the world. The stock is inexplicably down 21% in the last month. Coupang Wow is similar to Amazon Prime and its logistics and operations are comparable to JD.com. This is an extremely efficient company.
If you add South Korea, Japan and Taiwan’s population you get nearly 200 million people. That’s easily more than Amazon’s total number of E-commerce clients today in North America. Its potential TAM is enormous and outside the territory of Amazon or Chinese giants.
Coupang is in the early phases of expanding its business in Japan and Taiwan. It is too early to estimate the growth potential in those regions, but if you are bullish like me, you quickly realize its current market cap of $53 billion makes little sense.
The company had an initial public offering in March. After the initial trading volume surge, daily interest waned. Negative sentiment about China’s stocks are likely impacting Coupang even though South Korea is a totally different market. Coupang for me is a buy at $25 or lower. But in a market correction of 15% or more I’d pick some up and hold for 10 years or more.
It’s practically a monopoly already. That’s the very definition of a safe growth company. Think about it, South Korea’s leading online retailer has rattled off 15 consecutive quarters of more-than-50% top-line growth.
It has a bigger moat than you would expect for an e-commerce company, largely because of its network of 100 fulfillment centers across South Korea — there’s one within seven miles of 70% of the country’s residents.
In a market crash this name could crater due to poor visibility and sentiment for Asian stocks, but in the next two decades it could become one of the biggest winners.